MOSCOW/KIEV (REUTERS) - Moscow and Kiev have signed agreements covering the supply of Russian gas via Ukraine to Europe, a spokesman for Kremlin-controlled Gazprom said on Friday (Dec 20), marking a major step towards clinching a final deal.

Earlier on Friday, two sources told Reuters that Russia and Ukraine were moving closer to settling a legal dispute over the supply and transit of natural gas between the former Soviet states.

Until now the row had prevented a new deal to supply Russian gas to Ukraine and the rest of Europe. An existing supply agreement is due to expire at the end of December.

"The Russian and Ukrainian sides have signed the protocol of the agreements about continuation of gas transit through Ukrainian territory and settlement of mutual claims," Sergei Kupriyanov, Gazprom's spokesman, said.

He declined to elaborate further.

Russian Deputy Prime Minister Dmitry Kozak, cited by RIA news agency, said the deal covers a five-year period and that the final contract is expected to be signed by the New Year.

Russia has offered to pay Ukraine about US$3 billion (S$4 billion), while Kiev has signalled it may drop a US$12 billion legal case in response, the sources said on Friday.

Gazprom supplies more than 36 per cent of the European Union's gas market and Brussels has been worried that Russian supplies through Ukraine could be suspended.

The European Commission had mediated the talks to secure a new gas pact and ensure no supply disruption.

"Now we have in place a political framework with the key arrangements that are necessary to pave the way for a long-term gas transit contract between companies," European Commission Vice-President Maros Sefcovic, who took part in Friday's talks, said in a statement.

Russian President Vladimir Putin said that Moscow aimed to reach a new gas transit deal with Kiev, with "mutually beneficial (conditions), without creating risks for both sides".

The office of Ukrainian president confirmed the agreements were signed, saying the details would be provided on Saturday.

WIDER DISPUTE

The gas row is part of a wider dispute between Russia and Ukraine, with Kiev caught in a tug-of-war between Moscow and the West for influence over it.

The agreement was signed after hours of talks between Gazprom, Ukrainian energy firm Naftogaz as well as Russia and Ukraine's energy ministers in Belarus.

The Russian offer of US$3 billion is in line with the amount proposed in arbitration rulings between Gazprom and Ukrainian energy firm Naftogaz in 2018.

Ukraine and Russia have been at odds over gas prices for years and relations between the two countries blew up in 2014 after a pro-Russian Ukrainian leader was overthrown.

Moscow responded by seizing Ukraine's Crimea peninsula and backing pro-Russian separatists in eastern Ukraine, where fighting has killed more than 13,000 people.

Naftogaz has also submitted a new claim to the Stockholm arbitration court for around US$12 billion from Gazprom related to a transit contract.

Two sources familiar with the talks said that Kiev was ready to drop this second claim as part of a wider package agreement, which includes conditions on Russian gas transit via Ukraine, its key route for fuel supplies to Europe.

Russia's Energy Ministry did not respond to requests for a comment.

Naftogaz Chief Executive Andriy Kobolyev said on Friday, the talks on Thursday led to an agreement in principle on a new deal.